Coworking is booming but can the good times last?
The world is in the grip of a workspace revolution.
A desire for more controllable rental agreements and a cultural shift that places work/life balance high on the agenda for potential new recruits is creating a huge demand for flexible working.
A recent survey by IWG of 15,000 companies in 100 countries found that talent is embracing flexible working – 80% of employees said they would pick a job that offered flexible working over one that didn’t.
According to one study, a coworking space opens in London every five days, with the number of new flexible working locations in Central London growing 42% year-on-year, and every 7.5 days in New York City.
Elaine Rossall, Head of UK Offices Research & Strategy at real estate advisors Jones Lang LaSalle (JLL), said central London was now “by far” the biggest and most developed co-working market in the country. “The sector has seen its footprint expand rapidly over the five years from 2013, increasing by 26% per annum, compared to just 9% per annum in the previous five years,” she says.
“Looking forward, we anticipate that the sector will expand further, in response to growth in demand from larger companies and changes to the way we work – we estimate that by 2023 it will account for 11% of the office stock.”
Los Angeles is another example of a global city in the grip of a coworking boom. As the second largest market for coworking spaces in the USA, the number of its available flexible working spaces has doubled in the past 24 months, with almost 2% of LA’s 222 million square feet of office space now classed as flexible.
This type of growth shows no signs of abating. According to data published by JLL, this year alone there have been a huge number of flexible office and coworking deals signed in LA. IWG’s Spaces brand has signed a further two leases since January, with the company’s Vice President of Networking Development Michael Berretta stating that the city presented a “massive opportunity” for the company.
“As the market continues to establish itself as an entrepreneurial hub, more and more businesses are leaning into the benefits of coworking,” he says. “Coworking has been shown to be a key driver in attracting and retaining talent, which is important in a competitive market such as LA.”
Jerome Fried, Managing Director at Savills, says demand is the biggest driver of the city’s current flexible office space boom. “When you look at the occupancy in nearly all of the locations, they are very highly occupied,” he says. “There is enough demand to withstand the flow of new product.”
In January, Spaces signed leases for around 48,000sq ft at the Playhouse Plaza office building in Pasadena, and an even bigger spot with the 69,000sq ft at the Water Garden in Santa Monica. Fried believes the coworking model is here to stay: “Even if there is a correction in the market, this industry that came out of nowhere is sticking around,” he concludes.
